##### Table of Contents

---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



---



FORM 10-Q



Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934



|For the three months ended March 31, 2003 |  | Commission File Number 0-14371
|----------------------------------------- |  | ------------------------------



COMPUCOM SYSTEMS, INC.

(Exact name of Registrant as specified in its charter)



|Delaware                                                       |  | 38-2363156                             
|-------------------------------------------------------------- |  | ---------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



|7171 Forest Lane, Dallas, TX             |  | 75230     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip Code)



Registrants telephone number, including area code: (972) 856-3600



Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes x    No ̈



Indicate by
check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes x    No ̈



The number of shares of the Registrants common stock outstanding as of May 9, 2003 was 49,397,348 shares.



---



---

##### Table of Contents



COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Index



|        
|--------
|PARTI.  
|        
|Item 1. 
|        
|        
|        
|        
|        
|        
|        
|        
|        
|Item 2. 
|        
|Item 3. 
|        
|Item 4. 
|        
|PART II.
|        
|Item 1. 
|        
|Item 6. 



2



---

##### Table of Contents



COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)



|                                           |  | March 31, 2003 |         | December 31, 2002
|------------------------------------------ |  | -------------- | ------- | -----------------
|Assets                                     |  |               
|Current assets:                            |  |                |         |                  
|Cash and cash equivalents                  |  | $              | 138,849 |                  
|Receivables, net                           |  |                | 93,440  |                  
|Inventories                                |  |                | 23,338  |                  
|Other                                      |  |                | 6,267   |                  
|                                           |  |                |         |                  
|Total current assets                       |  |                | 261,894 |                  
|                                          
|Property and equipment, net                |  |                | 23,217  |                  
|                                          
|Goodwill                                   |  |                | 102,253 |                  
|Intangible assets, net                     |  |                | 7,006   |                  
|Other                                      |  |                | 1,312   |                  
|                                           |  |                |         |                  
|                                          
|Total assets                               |  | $              | 395,682 |                  
|                                           |  |                |         |                  
|                                          
|Liabilities and Stockholders
Equity       |  |                |         |                  
|Current liabilities:                       |  |                |         |                  
|Accounts payable                           |  | $              | 86,023  |                  
|Accrued liabilities                        |  |                | 49,972  |                  
|                                           |  |                |         |                  
|Total current liabilities                  |  |                | 135,995 |                  
|                                          
|Stockholders equity:                      |  |                |         |                  
|Preferred stock                            |  |                | 15,000  |                  
|Common stock                               |  |                | 493     |                  
|Additional paid-in capital                 |  |                | 75,293  |                  
|Retained earnings                          |  |                | 168,901 |                  
|                                           |  |                |         |                  
|Total stockholders equity                 |  |                | 259,687 |                  
|                                           |  |                |         |                  
|                                          
|Total liabilities and stockholders equity |  | $              | 395,682 |                  
|                                           |  |                |         |                  



See accompanying notes
to condensed consolidated financial statements.



3



---

##### Table of Contents



COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)



|                                                                                                             |  | Three months ended
|------------------------------------------------------------------------------------------------------------ |  | ------------------
|                                                                                                             |  | March 31,         
|                                                                                                             |  | 2003              
|Revenue:                                                                                                     |  |                   
|Product                                                                                                      |  | $                 
|Service                                                                                                      |  |                   
|                                                                                                             |  |                   
|Total revenue                                                                                                |  |                   
|                                                                                                             |  |                   
|                                                                                                            
|Cost of revenue:                                                                                             |  |                   
|Product                                                                                                      |  |                   
|Service                                                                                                      |  |                   
|                                                                                                             |  |                   
|Total cost of revenue                                                                                        |  |                   
|                                                                                                             |  |                   
|                                                                                                            
|Gross margin                                                                                                 |  |                   
|                                                                                                            
|Operating expenses:                                                                                          |  |                   
|Selling                                                                                                      |  |                   
|Service                                                                                                      |  |                   
|General and administrative                                                                                   |  |                   
|Depreciation and amortization                                                                                |  |                   
|                                                                                                             |  |                   
|Total operating expenses                                                                                     |  |                   
|                                                                                                             |  |                   
|                                                                                                            
|Earnings from operations                                                                                     |  |                   
|                                                                                                            
|Financing expenses, net                                                                                      |  |                   
|                                                                                                             |  |                   
|Earnings before income taxes and cumulative effect of a change in accounting principle
for negative goodwill |  |                   
|                                                                                                            
|Income taxes                                                                                                 |  |                   
|                                                                                                             |  |                   
|                                                                                                            
|Earnings before cumulative effect of a change in accounting principle for negative
goodwill                  |  |                   
|                                                                                                            
|Cumulative effect of a change in accounting principle for negative goodwill, net of
income taxes             |  |                   
|                                                                                                             |  |                   
|                                                                                                            
|Net earnings                                                                                                 |  | $                 
|                                                                                                             |  |                   
|                                                                                                            
|Basic and diluted earnings per common share:                                                                 |  |                   
|Earnings before cumulative effect of a change in accounting principle for negative
goodwill                  |  | $                 
|Cumulative effect of a change in accounting principle for negative goodwill, net of
income taxes             |  |                   
|                                                                                                             |  |                   
|Net earnings                                                                                                 |  | $                 
|                                                                                                             |  |                   
|Average common shares outstanding:                                                                           |  |                   
|Basic                                                                                                        |  |                   
|Diluted                                                                                                      |  |                   



See accompanying notes
to condensed consolidated financial statements.



4



---

##### Table of Contents



COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)



|                                                                                                 |  | Three months ended March 31, |        
|------------------------------------------------------------------------------------------------ |  | ---------------------------- | -------
|                                                                                                 |  | 2003                         |        
|Cash flows from operating activities:                                                            |  |                              |        
|Net earnings                                                                                     |  | $                            | 3,349  
|Adjustments to reconcile net earnings to net cash provided by (used in) operating
activities:    |  |                              |        
|Cumulative effect of a change in accounting principle for negative goodwill, net of
income taxes |  |                              |       
|Depreciation and amortization                                                                    |  |                              | 4,180  
|Deferred income taxes                                                                            |  |                              | 983    
|Changes in assets and liabilities:                                                               |  |                              |        
|Receivables                                                                                      |  |                              | 53,292 
|Inventories                                                                                      |  |                              | 4,394  
|Other current assets                                                                             |  |                              | (397   
|Accounts payable                                                                                 |  |                              | (31,229
|Accrued liabilities and other                                                                    |  |                              | (21,282
|                                                                                                 |  |                              |        
|Net cash provided by (used in) operating activities                                              |  |                              | 13,290 
|                                                                                                 |  |                              |        
|                                                                                                
|Cash flows from investing activities:                                                            |  |                              |        
|Capital expenditures                                                                             |  |                              | (2,327 
|                                                                                                 |  |                              |        
|Net cash used in investing activities                                                            |  |                              | (2,327 
|                                                                                                 |  |                              |        
|                                                                                                
|Cash flows from financing activities:                                                            |  |                              |        
|Issuance of common stock                                                                         |  |                              | 72     
|Preferred stock dividends                                                                        |  |                              | (225   
|                                                                                                 |  |                              |        
|Net cash used in financing activities                                                            |  |                              | (153   
|                                                                                                 |  |                              |        
|                                                                                                
|Net increase (decrease) in cash and cash equivalents                                             |  |                              | 10,810 
|Cash and cash equivalents at beginning of period                                                 |  |                              | 128,039
|                                                                                                 |  |                              |        
|Cash and cash equivalents at end of period                                                       |  | $                            | 138,849
|                                                                                                 |  |                              |        



See accompanying notes
to condensed consolidated financial statements.



5



---

##### Table of Contents



COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements

March 31, 2003

(unaudited)

|
|

|(1) |  | General
|--- |  | -------



These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and the
summary of significant accounting policies and notes thereto included in the 2002 Annual Report on Form 10-K for CompuCom Systems, Inc. (CompuCom or the Company). The information furnished is unaudited but reflects all
adjustments, consisting only of normal recurring accruals, which are in the opinion of management necessary for a fair presentation of the results for these interim periods. Interim results are not necessarily indicative of results expected for the
full year.



|(2) |  | Contingencies
|--- |  | -------------



CompuCom is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, these
matters are not material.



|(3) |  | Earnings per share
|--- |  | ------------------



In accordance with Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share, basic earnings
per common share have been computed based on net earnings after preferred stock dividend requirements and the weighted average number of common shares outstanding during each period. Diluted earnings per common share assumes conversion of dilutive
convertible securities into common stock at the later of the beginning of the period or date of issuance and includes the add-back of related dividends, as required. Diluted earnings per common share also assumes the exercise of all options with an
exercise price below the average market price of the Companys stock, at the later of the beginning of the period or date of issuance, regardless of whether the options are vested or not. Earnings per common share have been computed as follows
(in thousands, except per share amounts):



|                                          |  | Three months ended March 31,2003
|----------------------------------------- |  | --------------------------------
|                                          |  | Earnings (Numerator)            
|                                         
|Net earnings                              |  | $                               
|Less: Preferred stock dividends           |  |                                 
|                                          |  |                                 
|Basic EPS                                 |  |                                 
|Earnings available to common shareholders |  |                                 
|                                         
|Effect of dilutive securities             |  |                                 
|Stock options                             |  |                                 
|Employee stock purchase plan              |  |                                 
|                                          |  |                                 
|                                         
|Diluted EPS                               |  |                                 
|Earnings available + assumed conversions  |  | $                               
|                                          |  |                                 



6



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements

March 31, 2003

(unaudited)







|                                                                                                                             |  | Three months ended March 31, 2002
|---------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------
|                                                                                                                             |  | Earnings (Numerator)             
|                                                                                                                            
|Earnings before cumulative effect of a change in accounting principle for negative
goodwill                                  |  | $                                
|Less: Preferred stock dividends                                                                                              |  |                                  
|                                                                                                                             |  |                                  
|                                                                                                                            
|Basic EPS                                                                                                                    |  |                                  
|Earnings available to common shareholders before cumulative effect of a change in accounting principle for negative
goodwill |  |                                  
|Effect of dilutive securities                                                                                                |  |                                  
|Stock options                                                                                                                |  |                                  
|Employee stock purchase plan                                                                                                 |  |                                  
|                                                                                                                             |  |                                  
|                                                                                                                            
|Diluted EPS                                                                                                                  |  |                                  
|Earnings available + assumed conversions                                                                                     |  | $                                
|                                                                                                                             |  |                                  



CompuCom has excluded
3,979,300 and 6,532,023 shares from its calculations of diluted earnings per share for the three months ended March 31, 2003 and 2002, respectively, as they are considered anti-dilutive.



7



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements

March 31, 2003

(unaudited)





|(4) |  | Goodwill and Intangible Assets
|--- |  | ------------------------------



Intangible assets with definite useful lives are amortized over their respective estimated useful lives to their estimated residual
values. The following table provides a summary of CompuComs intangible assets with definite useful lives as of March 31, 2003 and December 31, 2002 (in thousands):



|                 |  | Amortization Period |                      | March 31, 2003   
|---------------- |  | ------------------- | -------------------- | -----------------
|                 |  |                     | Gross Carrying Value |                  
|Customer-related |  | 6  11 years        |                      | $15,467          
|Contract-related |  | 24  36 months      |                      | 2,840            
|                 |  |                     |                      |                  
|Total            |  |                     |                      | $18,307          
|                 |  |                     |                      |                  
|                
|                 |  | Amortization Period |                      | December 31, 2002
|                 |  |                     | Gross Carrying Value |                  
|Customer-related |  | 6  11 years        |                      | $15,467          
|Contract-related |  | 24  36 months      |                      | 2,840            
|                 |  |                     |                      |                  
|Total            |  |                     |                      | $18,307          
|                 |  |                     |                      |                  



Amortization expense related to intangible assets with definite useful lives was $0.8 million and $0.9 million for the three months ended March 31, 2003 and 2002, respectively. The following table provides estimated amortization
expense related to intangible assets with definite useful lives for each of the years in the five year period ending December 31, 2007:



|Remainder of 2003   |  | $ | 2,334
|------------------- |  | - | -----
|2004                |  |   | 2,494
|2005                |  |   | 579  
|2006                |  |   | 246  
|2007 and thereafter |  |   | 1,353
|                    |  |   |      
|                    |  | $ | 7,006
|                    |  |   |      



In
accordance with SFAS No. 142, Goodwill and Other Intangible Assets, approximately $1.3 million of negative goodwill associated with the 2001 MicroAge Technology Services, L.L.C. acquisition was recognized in the Condensed Consolidated
Statements of Operations in the first quarter of 2002 as a cumulative effect of a change in accounting principle. There has been no change in the carrying amount of goodwill for the three months ended March 31, 2003.



8



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements

March 31, 2003

(unaudited)





|(5) |  | Restructuring Charges
|--- |  | ---------------------



During the first quarter of 2000, CompuCom effected a restructuring plan designed to reduce its cost structure by closing its distribution
facility located in Houston, Texas, closing and consolidating three office facilities, and reducing its workforce. As a result, CompuCom recorded a restructuring charge of $5.2 million. During the fourth quarter of 1998, CompuCom recorded a $16.4
million restructuring charge, primarily consisting of costs associated with the closing of facilities and disposing of related fixed assets as well as employee severance and benefits related to a reduction in workforce.



The following table provides a summary rollforward by
category of the activity in CompuComs restructuring accrual for the three months ended March 31, 2003 (in thousands):



|                        |  | Accrual at December 31, 2002 |       | Cash Payments |   |      | Accrual at March 31, 2003
|----------------------- |  | ---------------------------- | ----- | ------------- | - | ---- | -------------------------
|Lease termination costs |  | $                            | 1,303 |               | $ | (167 | )                        
|                        |  |                              |       |               |   |      |                          



The
remaining accrual at March 31, 2003 is reflected in Accrued liabilities on CompuComs Condensed Consolidated Balance Sheet and relates to seven leases for former office sites that have not been terminated, two of which have not been sublet. The
Company believes the restructuring accrual is adequate. Differences, if any, between the estimated amount accrued and actual amounts paid will be reflected in operating expenses in future periods.



|(6) |  | Segment Information
|--- |  | -------------------



CompuCom defines its operations as two distinct businesses1) product business (product), where revenue is primarily
derived from the sale of desktop, networking, storage, and mobile computing products, as well as peripherals and software-related products and licenses and 2) service business (service), which includes revenue primarily derived from
application design, development and maintenance, all aspects of desktop outsourcing, including field engineering, as well as help desk and LAN/WAN network outsourcing, configuration, asset tracking, software management, mobile computing services, IT
consulting, training, contract consulting, and services provided to support certain manufacturers direct fulfillment initiatives. CompuCom measures segment earnings as operating earnings, defined as income before restructuring charges,
financing expenses and income taxes. All significant inter-segment activity has been eliminated.



9



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements

March 31, 2003

(unaudited)





|Quarter Ended March 31, 2003                                                                       |  |         |         |         |   |        | 
|-------------------------------------------------------------------------------------------------- |  | ------- | ------- | ------- | - | ------ | 
|                                                                                                  
|Operating Results                                                                                  |  | Product |         | Service |   | Total  | 
|(in thousands)                                                                                     |  |         |         |         |   |        | 
|                                                                                                  
|Revenues                                                                                           |  | $       | 257,418 |         | $ | 72,879 | 
|                                                                                                  
|Gross margin                                                                                       |  |         | 22,119  |         |   | 22,573 | 
|                                                                                                  
|Operating earnings                                                                                 |  |         | 1,395   |         |   | 4,272  | 
|                                                                                                  
|Financing expenses, net                                                                            |  |         |         |         |   |        | 
|                                                                                                   |  |         |         |         |   |        | 
|                                                                                                  
|Earnings before income taxes                                                                       |  |         |         |         |   |        | 
|                                                                                                   |  |         |         |         |   |        | 
|                                                                                                  
|Quarter Ended March 31, 2002                                                                       |  |         |         |         |   |        | 
|                                                                                                  
|Operating Results                                                                                  |  | Product |         | Service |   | Total  | 
|(in thousands)                                                                                     |  |         |         |         |   |        | 
|                                                                                                  
|Revenues                                                                                           |  | $       | 259,269 |         | $ | 67,679 | 
|                                                                                                  
|Gross margin                                                                                       |  |         | 26,731  |         |   | 23,548 | 
|                                                                                                  
|Operating earnings                                                                                 |  |         | 2,450   |         |   | 2,275  | 
|                                                                                                  
|Financing expenses, net                                                                            |  |         |         |         |   |        | 
|                                                                                                   |  |         |         |         |   |        | 
|                                                                                                  
|Earnings before income taxes and cumulative effect of a change in accounting for
negative goodwill |  |         |         |         |   |        | 
|                                                                                                   |  |         |         |         |   |        | 



10



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements

March 31, 2003

(unaudited)





|(7) |  | Stock-Based Compensation
|--- |  | ------------------------



CompuCom uses the intrinsic-value method as provided by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees in accounting for its various fixed stock option plans and its employee stock purchase plan (ESPP) and provides pro forma disclosures of the compensation expense determined under the fair value provisions of SFAS No. 123,
Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure. Accordingly, CompuCom did not recognize compensation expense upon the issuance of its
stock options because the option terms were fixed and the exercise price equaled the market price of CompuComs common stock on the date of grant.



The following table displays the effect on net earnings and earnings per share had the fair value method been applied during each period
presented (in thousands, except per share data):



|                                                                         |  |             |       | Three months ended March 31,
|------------------------------------------------------------------------ |  | ----------- | ----- | ----------------------------
|                                                                         |  |             |       | 2003                        
|Net earnings as reported                                                 |  | $           | 3,349 |                             
|Stock-based compensation excluded from reported net earnings, net of
tax |  |             | 412   |                             
|                                                                         |  |             |       |                             
|Pro forma net earnings                                                   |  | $           | 2,937 |                             
|                                                                         |  |             |       |                             
|                                                                        
|Basic earnings per share                                                 |  | As reported |       | $                           
|                                                                         |  | Pro forma   |       | $                           
|                                                                        
|Diluted earnings per share                                               |  | As reported |       | $                           
|                                                                         |  | Pro forma   |       | $                           



11



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements

March 31, 2003

(unaudited)





|(8) |  | Financing Arrangements
|--- |  | ----------------------



At March 31, 2003, CompuCom had financing arrangements of $125 million, consisting of a $100 million receivable securitization
(Securitization) and a $25 million working capital line of credit (Revolver).



The Securitizations pricing is based on a designated short-term interest rate plus an agreed upon spread. The Securitization allows
CompuCom to sell, on an ongoing basis, its trade accounts receivable (receivables) to a consolidated, wholly-owned bankruptcy-remote special purpose subsidiary (the SPS). The risk that CompuCom bears from bad debt losses on
receivables sold is addressed in its allowance for doubtful accounts. The SPS has sold and, subject to certain conditions, may from time to time sell, an undivided ownership interest in the pool of purchased receivables to financial institutions. As
collections reduce receivables balances sold, CompuCom may sell interests in new receivables to bring the amount available up to the maximum allowed. The sales are reflected as reductions of Receivables in the Condensed Consolidated Balance Sheets
and are included in the net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. The proceeds from the sale of receivables are used primarily to fund working capital requirements. CompuCom is retained as
servicer of the receivables; however, the cost of servicing is not material. Discounts associated with the sale of receivables totaled $0.3 million and $0.4 million for the three months ended March 31, 2003 and 2002, respectively, and are included
in Financing expenses, net in the Condensed Consolidated Statements of Operations. Amounts outstanding as sold receivables as of March 31, 2003 consisted of two certificates totaling $59.4 million. Within the context of the Securitization, each
certificate is issued from a separate facility, each facility set at $50 million. One $50 million facility, with an October 2003 maturity date, has one certificate issued for $50 million. The other $50 million facility, with an October 2005 maturity
date, has one certificate issued for $9.4 million.



The Revolver, which initially had a May 2002 maturity date but has been extended to a May 2003 maturity date, bears interest at a rate of LIBOR plus an agreed-upon spread and is secured by a lien on CompuComs assets. CompuCom
expects the Revolver to be renewed during the second quarter of 2003. Availability under the Revolver is subject to a borrowing base calculation. As of March 31, 2003, availability under the Revolver was $25 million. No amounts were outstanding
under the Revolver as of March 31, 2003 and December 31, 2002. Terms of the Revolver limit the amounts available for capital expenditures and dividends. Both the Securitization and the Revolver require CompuCom to maintain compliance with selected
financial covenants and ratios.



Interest income
of $0.3 million and $0.6 million was earned during the three months ended March 31, 2003 and 2002, respectively, and is included in Financing expenses, net, in the Condensed Consolidated Statements of Operations.



12



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Managements Discussion and Analysis of Financial Condition and Results of Operations

March 31,
2003



Founded in 1987, CompuCom Systems, Inc.,
together with its subsidiaries (CompuCom or the Company) is a leading provider of full life-cycle information technology (IT) solutions to large and medium-sized organizations throughout the United States. The
Company offers its clients a single-source for procuring, deploying, managing and supporting complex computing environments. Through its comprehensive portfolio of service and product offerings, CompuCom helps clients reduce the costs, complexities,
obstacles and risks associated with new technology adoption and acquisition, operational transition and on-going management of their information systems.



CompuComs discussion and analysis of its financial condition and results of operations are based upon CompuComs Condensed
Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires CompuCom to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. CompuCom bases its estimates on historical experience and on other relevant assumptions that are believed to
be reasonable under the circumstances. Actual results may differ from these estimates.



13



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Managements Discussion and Analysis of Financial
Condition and Results of Operations

March 31, 2003



Results of Operations



The following table shows CompuComs total revenue, gross margin and gross margin percentage by revenue source.
Operating expenses, financing expenses, income taxes, cumulative effect of a change in accounting principle for negative goodwill, and net earnings are shown as a percentage of total revenue for the three months ended March 31, 2003 and 2002 (in
thousands):



|                                                                                                             |  | Three months ended March 31 |        
|------------------------------------------------------------------------------------------------------------ |  | --------------------------- | -------
|                                                                                                             |  | 2003                        |        
|Revenue:                                                                                                     |  |                             |        
|Product                                                                                                      |  | $                           | 257,418
|Service                                                                                                      |  |                             | 72,879 
|                                                                                                             |  |                             |        
|Total revenue                                                                                                |  | $                           | 330,297
|                                                                                                             |  |                             |        
|                                                                                                            
|Gross margin:                                                                                                |  |                             |        
|Product                                                                                                      |  | $                           | 22,119 
|Service                                                                                                      |  |                             | 22,573 
|                                                                                                             |  |                             |        
|Total gross margin                                                                                           |  | $                           | 44,692 
|                                                                                                             |  |                             |        
|                                                                                                            
|Gross margin percentage:                                                                                     |  |                             |        
|Product                                                                                                      |  |                             | 8.6    
|Service                                                                                                      |  |                             | 31.0   
|                                                                                                             |  |                             |        
|Total gross margin percentage                                                                                |  |                             | 13.5   
|                                                                                                            
|Operating expenses:                                                                                          |  |                             |        
|Selling                                                                                                      |  |                             | 3.2    
|Service                                                                                                      |  |                             | 2.8    
|General and administrative                                                                                   |  |                             | 4.5    
|Depreciation and amortization                                                                                |  |                             | 1.3    
|                                                                                                             |  |                             |        
|Total operating expenses                                                                                     |  |                             | 11.8   
|                                                                                                             |  |                             |        
|                                                                                                            
|Earnings from operations                                                                                     |  |                             | 1.7    
|                                                                                                            
|Financing expenses, net                                                                                      |  |                             | 0.0    
|                                                                                                             |  |                             |        
|Earnings before income taxes and cumulative effect of a change in accounting principle
for negative goodwill |  |                             | 1.7    
|                                                                                                            
|Income taxes                                                                                                 |  |                             | 0.7    
|                                                                                                             |  |                             |        
|                                                                                                            
|Earnings before cumulative effect of a change in accounting principle for negative
goodwill                  |  |                             | 1.0    
|                                                                                                             |  |                             |        
|                                                                                                            
|Cumulative effect of a change in accounting principle for negative goodwill, net of
income taxes             |  |                             | 0.0    
|                                                                                                             |  |                             |        
|                                                                                                            
|Net earnings                                                                                                 |  |                             | 1.0    
|                                                                                                             |  |                             |        



14



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Managements Discussion and Analysis of Financial
Condition and Results of Operations





Comparison of the Quarter Ended March 31, 2003 to the Quarter Ended March 31, 2002



Product revenue is primarily derived from the sale of hardware, which mainly includes desktop, networking, storage, and mobile computing
products and peripherals. Also included in product revenue is the sale of software, which includes software-related products and licenses. Product revenue declined 0.7% to $257.4 million in the first quarter of 2003 from $259.3 million in the first
quarter of 2002. The hardware portion of total product revenue declined 4.4% to $206.8 million in the first quarter of 2003 from $216.3 million in the first quarter 2002. The software portion of total product revenue increased 17.7% to $50.6 million
in the first quarter 2003 from $43.0 million in the first quarter 2002. CompuCom believes general economic conditions continue to hamper demand for the products it sells. As a result of this economic slowdown, product purchases and IT projects
continue to be delayed, downsized or cancelled. The increase in the software portion of total product revenue is primarily a result of the expansion of CompuComs product offerings relative to software. On a sequential basis, hardware revenue
declined 19.1% and software revenue declined 28.5%, which is considered by the Company to be a normal, seasonal trend.



Product gross margin is the difference between product revenue and the cost of that product revenue. The cost of product revenue consists
primarily of the price CompuCom pays to acquire the product from the vendor. Product gross margin dollars declined $4.6 million to $22.1 million in the first quarter 2003 from $26.7 million in the first quarter 2002. Product gross margin as a
percentage of product revenue decreased to 8.6% in the first quarter of 2003 from 10.3% in the first quarter of 2002. CompuCom believes the decrease in product gross margin as a percentage of product revenue was primarily due to a decrease in the
amount of vendor volume and other incentives earned in the first quarter of 2003 as compared to the first quarter of 2002. Sequentially, product gross margin as a percentage of product revenue increased from 7.8% in the fourth quarter of 2002. The
increase was primarily due to an increase, as a percentage of product revenue, in the amount of vendor volume and other incentives earned in the first quarter 2003 as compared to the fourth quarter of 2002. Due to economic and competitive
conditions, CompuCom expects to experience continued pressure on both product revenue and product gross margin, the result of which may be to report both lower product revenue and gross margin dollars, as well as a lower gross margin percentage when
compared to the comparable prior year period or previous quarter.



15



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Managements Discussion and Analysis of Financial
Condition and Results of Operations





Service
revenue increased 7.7% to $72.9 million for the first quarter of 2003 from $67.7 million for the first quarter of 2002. Sequentially, service revenue decreased 5.9%. Service revenue is primarily derived from services directly related to the sale of
product, such as configuration, vendor warranty contracts and services to support certain OEM product fulfillment programs, IT outsourcing services, such as desktop support, field engineering, and help desk, as well as application development,
systems integration, contract consulting and other consulting services. Service revenue reflects revenue generated by the actual performance of specific services and does not include product sales. The increase in service revenue for the first
quarter of 2003 as compared to the same period in 2002 was primarily due to an increase in services provided to the federal government and contract consulting services, partially offset by decreases in field engineering services and services
directly related to the sale of product. The sequential decline in service revenue was primarily due to declines in services directly related to the sale of product and field engineering services, partially offset by increases in contract consulting
services and services provided to the federal government. Service gross margin as a percentage of service revenue for the quarter ended March 31, 2003 was 31.0% compared to 34.8% for the same period in 2002. The decrease in service gross margin as a
percentage of service revenue from the first quarter of 2002 to the first quarter of 2003 was primarily the result of the increase in lower margin services to the federal government and continued pricing pressure. Sequentially, service gross margin
was relatively flat. CompuCom expects to experience continued pressure on both service revenue and service gross margin, the result of which may be to report lower service revenue and related service gross margin when compared to the comparable
prior year period or previous quarter.



Selling
expenses consist primarily of salary, commissions and benefits for sales and sales-support personnel, along with other costs directly related to such personnel. Selling expenses decreased $1.7 million for the three months ended March 31, 2003 as
compared to the same period in the prior year. Selling expenses as a percentage of revenue decreased to 3.2% for the three months ended March 31, 2003 from 3.8% for the same period a year ago. CompuCom attributes this decrease to its own cost
management efforts, primarily related to personnel and related costs.



Service expenses consist primarily of salary and benefits cost for personnel supporting the service business, along with other costs directly related to such personnel. Service expenses decreased $1.6 million for the three
months ended March 31, 2003 as compared to the three months ended March 31, 2002. As a percentage of revenue, service expenses decreased to 2.8% for the three months ended March 31, 2003 from 3.3% for the same period a year ago. The decrease was due
primarily to CompuComs cost management efforts which include personnel-related costs, as well as certain infrastructure costs, primarily telecommunications expense.



General and administrative expenses consist principally of salary and benefit costs for executive,
operations, information services, and administrative personnel, along with certain infrastructure costs directly related to such personnel, as well as professional services and other general corporate activities. General and administrative expenses
decreased $2.7 million for the three months ended March 31, 2003 as compared to the three months ended March 31, 2002. General and administrative expense decreased as a percentage of revenue from 5.4% to 4.5% for the comparable periods. The decrease
is reflective of the Companys ongoing cost management efforts which primarily include personnel-related costs, as well as certain infrastructure costs, primarily telecommunications expense. Operating expenses are reported net of reimbursements
by certain manufacturers for specific training, promotional and marketing programs. These reimbursements offset certain expenses incurred.



16



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Managements Discussion and Analysis of Financial
Condition and Results of Operations





Depreciation and amortization expense decreased approximately $0.6 million for the quarter ended March 31, 2003 as compared to the quarter ended March 31, 2002. As a percentage of revenue, depreciation and amortization expense
decreased from 1.5% to 1.3% during the same periods.



Financing expenses, net decreased to $0.1 million for the quarter ended March 31, 2003 from $0.3 million for the same period in the prior year. This decrease was primarily due to CompuComs continued improvement in working
capital management and lower effective interest rates in the first quarter of 2003 as compared to the first quarter of 2002. The decrease in financing expenses, net was partially offset by a decrease in interest earned on available cash for the
quarter ended March 31, 2003 as compared to the same period in the prior year, primarily as a result of a decline in interest rates.



As a result of the factors discussed above, CompuCom recorded net earnings for the quarter ended March 31, 2003 of $3.3 million. This
compares to first quarter 2002 earnings before the cumulative effect of a change in accounting principle for negative goodwill of $2.7 million. First quarter 2002 net earnings, including the cumulative effect of a change in accounting principle for
negative goodwill, were $3.4 million.



Liquidity and Capital Resources



Working capital at March 31, 2003 was $125.9 million compared to $121.0 million at December 31, 2002. The increase in working capital was primarily the result of declines in accounts payable and accrued liabilities, as well as an
increase in cash and cash equivalents. These factors were partially offset by declines in receivables and inventories. The declines in accounts payable, accrued liabilities, receivables and inventories were all attributable to the seasonal decline
in revenue in the first quarter of 2003 as compared to the fourth quarter of 2002.



CompuComs liquidity is impacted by the dollar volume of certain manufacturers customer specific rebate programs. Under these programs, CompuCom is required to pay a higher initial amount
for product and then claim a rebate from the manufacturer to reduce the final cost. These rebates are then passed on to the customer in the form of a reduced sales price. The collection of these rebates can take an extended period of time. Due to
these programs, CompuComs initial cost for the product is often higher than the sales price CompuCom can obtain from its clients. These programs have been at times a material factor in CompuComs financing needs. As of March 31, 2003 and
December 31, 2002, CompuCom was owed approximately $9.3 million and $18.5 million, respectively, under these vendor rebate programs. These outstanding amounts are included as a reduction to Accounts payable in the Condensed Consolidated Balance
Sheets.



In addition, CompuCom participates in
certain programs provided by various suppliers that enable it to earn volume incentive dollars. These incentives are generally earned by achieving quarterly sales targets. The amounts earned under these programs are recorded as a reduction to cost
of goods sold and are recorded as Receivables on the Condensed Consolidated Balance Sheets. As of March 31, 2003 and December 31, 2002, CompuCom was owed approximately $2.4 million and $3.3 million, respectively, under these supplier incentive
programs.



17



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Managements Discussion and Analysis of Financial
Condition and Results of Operations





CompuComs working capital requirements are generally funded through financing arrangements and internally generated funds. As of March 31, 2003, CompuComs financing arrangements consisted of a $100 million receivable
securitization (Securitization) and $25 million working capital line of credit (Revolver). The Securitization pricing is based on a designated short-term interest rate plus an agreed upon spread. Amounts outstanding as sold
receivables as of March 31, 2003 consisted of two certificates totaling $59.4 million. Within the context of the Securitization, each certificate is issued from a separate facility, each facility set at $50 million. One $50 million facility, with an
October 2003 maturity date, has one certificate issued for $50 million. The other $50 million facility, with an October 2005 maturity date, has one certificate issued for $9.4 million. The Revolver, which initially had a May 2002 maturity date but
has been extended to a May 2003 maturity date, bears interest at a rate of LIBOR plus an agreed upon spread and is secured by a lien on CompuComs assets. CompuCom expects the Revolver to be renewed during the second quarter of 2003.
Availability under the Revolver is subject to a borrowing base calculation. As of March 31, 2003, availability under the Revolver was $25 million with no outstanding amounts. Terms of the Revolver limit the amounts available for capital expenditures
and dividends. Both the Securitization and the Revolver require CompuCom to maintain compliance with selected financial covenants and ratios.



CompuComs business is not capital asset intensive, and capital expenditures in any year normally would not be significant in
relation to its overall financial position. Generally, the Companys capital expenditures relate to its information technology hardware and software and improvements in its distribution center. Capital expenditures were $2.3 million for the
three months ended March 31, 2003, as compared to $1.3 million for the same period in 2002. CompuCom currently expects capital expenditures of approximately $6 million to $8 million in the remaining nine months of 2003.



Recent Accounting Pronouncements



In January 2003, the Financial Accounting
Standards Board (FASB) issued FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. FIN 46 requires certain variable interest entities to be
consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the
provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. CompuCom does not expect FIN 46 to have a material effect on its financial condition or results of operations.



In November 2002, the FASBs Emerging Issues Task Force
(EITF) reached a consensus on Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. EITF Issue No. 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple
products, services and/or rights to use assets. The provisions of EITF Issue No. 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. CompuCom does not expect EITF Issue No. 00-21 to have a material
effect on its financial condition or results of operations.



18



---

##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES



Managements Discussion and Analysis of Financial
Condition and Results of Operations





Forward Looking Statements and Risks



This document contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements may be identified by words such as
will, believe, anticipate, intend, estimate, expect, project and similar expressions. Although we believe the expectations contained in the forward-looking
statements are reasonable, we can give no assurance that the expectations will prove correct. In addition, the forward-looking statements do not reflect the potential impact of any future acquisitions or mergers and related integration,
dispositions, joint ventures, strategic investments or one-time events. These forward-looking statements are subject to certain risks and uncertainties and a number of factors that could cause actual results to differ materially from those indicated
by the forward-looking statements, and as a result could have an adverse impact on our business, financial condition and operating results. These factors include: our ability to grow product and service revenue; declines in product revenue and
product gross margin may occur and may be greater than anticipated; our ability to improve services gross margin dollars and services gross margin as a percentage of total gross margin; our ability to meet manufacturers expectations in
providing assistance in implementing direct fulfillment initiatives; our ability to find additional ways to leverage costs and reduce costs further, including financing costs; our ability to improve operational efficiency; our ability to win new
clients; the expansion of the services the Company provides may not be as broad as the Company currently expects or widely accepted by clients; the manufacturers who use the Companys direct services may elect not to use those services; our
ability to retain key employees of acquired businesses; our ability to accurately value acquired businesses; and our ability to improve product and service gross margin and our balance sheet. Other factors that could cause actual results to differ
include: acquisition integration issues; the impact of competitive pricing and supply; manufacturers shift to direct fulfillment programs may be more significant than anticipated; the long-term effect of the Hewlett Packard acquisition of
Compaq; lower demand than anticipated for the products and services the Company sells; changes to suppliers pricing, price protection, rebate and incentive programs; short-term interest rate fluctuations; general economic conditions including
uncertainty created by military action; employee turnover; potential impact of litigation; the ability to collect trade and vendor accounts receivable; the impact of certain business and economic factors on the valuation of certain investments in
other businesses CompuCom has made or may make; and other uncertainties that may have an impact on future revenue and earnings as well as the risks and uncertainties set forth from time to time in our other public reports and statements, including
the risk factors set forth in our Annual Report on Form 10-K. As a result, readers should not place undue reliance on these forward-looking statements.



19



---

##### Table of Contents



COMPUCOM
SYSTEMS, INC. AND SUBSIDIARIES



Item 3. Quantitative and Qualitative Disclosure About Market Risk



CompuCom is exposed to interest rate risk primarily through its Securitization and Revolver. CompuCom utilizes its Securitization and
Revolver for its working capital and other borrowing needs. If CompuComs effective interest rate were to increase by 100 basis points (1.00%), CompuComs annual financing expense would increase by approximately $0.6 million based on the
average balances utilized under the Securitization and Revolver during the three months ended March 31, 2003.



Currently, CompuCom does not have any significant financial investments for trading or other speculative purposes or to manage interest
rate exposure.



Item 4. Controls and Procedures



Within the 90 days prior to the date of this report, CompuCom carried out an evaluation, under the supervision and with the participation of CompuComs management, including its President and Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of CompuComs disclosure controls and procedures. Based upon that evaluation, CompuComs President and Chief Executive Officer and Chief Financial Officer concluded
that CompuComs disclosure controls and procedures are effective in enabling it to record, process, summarize and report information required to be included in the periodic SEC filings within the required time period. There have been no
significant changes in CompuComs internal controls or in other factors that could significantly affect internal controls subsequent to the date CompuCom carried out its evaluation.



20



---

##### Table of Contents



PART II. OTHER
INFORMATION



Item 1. Legal Proceedings



CompuCom is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, these matters are not material.



Item 6. Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------



See Exhibit Index on page 25.



|(b) |  | Reports on Form 8-K
|--- |  | -------------------



None.



21



---

##### Table of Contents



COMPUCOM
SYSTEMS, INC. AND SUBSIDIARIES



Signatures



Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





|                   |  |  |  | COMPUCOM SYSTEMS, INC.
|------------------ |  |  |  | ----------------------
|                   |  |  |  |                       
|                  
|DATE: May 13, 2003 |  |  |  | /s/ J. Edward Coleman 
|                   |  |  |  |                       
|                  
|DATE: May 13, 2003 |  |  |  | /s/ M. Lazane Smith   
|                   |  |  |  |                       



22



---

##### Table of Contents



Certification



I, J. Edward Coleman, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of CompuCom Systems, Inc.;
| | -- |  | -----------------------------------------------------------------------------



| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: May 13, 2003



/s/ J. Edward Coleman

J. Edward Coleman

President and Chief Executive

Officer



23



---

##### Table of Contents



Certification



I, M. Lazane Smith, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of CompuCom Systems, Inc.;
| | -- |  | -----------------------------------------------------------------------------



| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: May 13, 2003



/s/ M. Lazane Smith

M. Lazane Smith

Senior Vice President, Finance, and

Chief Financial
Officer



24



---

##### Table of Contents



COMPUCOM
SYSTEMS, INC. AND SUBSIDIARIES



EXHIBIT INDEX



|Exhibit No. |  | Description                                                            
|----------- |  | -----------------------------------------------------------------------
|           
|99(a)       |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|           
|99(b)       |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002



25